Power Transmission and Buel Industries Limited IPO

General Overview

• Company: Buel Industries Limited
• Established: 1966
• Employee Strength: 259,000 employees, 767 contract workers
• Ownership: Arun Kumar Gupta (14%), other major stakeholders: 24% and PR B (10.85%)
• Facilities: 5 manufacturing facilities

Business Segments

1. Power Transmission: 9% of revenue
2. Agriculture: 6%
3. Other Industrial Applications: 5%
4. Steel and Power: 2%

Financial Highlights

• Market Capitalization: 4,000+ crore INR
• Price Band: INR 243 to 256
• Lot Size: 58
• Allocation:
  • 50% for Qualified Institutional Buyers (QIB)
  • 15% for Non-Institutional Investors (NII)
  • 35% for Retail Investors
• Debt to Equity Ratio: 1.47 (higher side)
• Revenue Growth: 16%
• Operating Margin: 4% to 5%
• Net Profit Margin: 4.5%
• Price to Book Ratio: 41.4x

Key Points

• Positives:
  • Completely fresh issue
• Negatives:
  • High Valuation: Price to book ratio of 41.4x
  • Concerns on Cash Flows

Conclusion

• Investment Consideration: The IPO is seen as risky for the long term due to high valuation and cash flow concerns. Individual judgement is advised.